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State Name: New Jersey
State Name underscore: New_Jersey
State Name dash: New-Jersey
State Name lower underscore: new_jersey
State Name lower dash: new-jersey
State Name lower: new jersey
State Abbreviation: NJ
State Abbreviation Lower: nj

After
my swimming lessons, my grandmother would take me to 7/11 for a
Slurpee. She'd count out her carefully saved coins, and I would have a
refreshing treat - great memories! (I was 42 years old, but no matter.)
Did you know that today, and every 7/11, participating 7-Eleven stores
are giving out free small Slurpee drink from 11AM to 7PM? (See, and you
say you never learn anything by reading this!) Slurpees took their name
in 1967, so plenty of Baby Boomers have consumed their fair share of
them. Pew Research reports Baby Boomers started turning 65 years old in
2011 and every day for the next 16 years, about 10,000 more will reach that threshold.
The latest Merrill Edge Report finds 63% of Americans say having enough
money for current living expenses is a higher priority than saving for
retirement - perhaps that is why 55% of those surveyed say their biggest
fear is running out of money in retirement. And the Insured Retirement
Institute finds about 50% of people 50 to 55 years of age have less than
$100k saved for retirement. How do you spell "reverse mortgage?"

The Senate voted overwhelmingly to confirm Julian Castro as the new secretary of Housing and Urban Development
on Wednesday, elevating Mr. Castro to President Obama's Cabinet. Castro
has served for three terms as mayor of San Antonio, and was the keynote
speaker at the 2012 Democratic National Convention. His twin brother,
Joaquin, is a Democratic congressman. Congratulations! And national due
diligence, quality control, and mortgage fulfillment provider RECOVCO
announced the appointment of three managing directors. "Reporting to
Blane Bauch, the company's chief sales and marketing officer, Michael
Moore, Greg Botto, and Bill Pearson immediately bolster the business
development team with coveted professionals that collectively bring
nearly one century of experience and exceptional track records to the
company."

The juggernaut of bank and mortgage company mergers and acquisitions continues to roll on.
Just in the last week or so... Mortgage origination and processing
company Complete Financial Solutions Inc. (WA) has signed an agreement
to acquire 23.3% of American Patriot Bank ($74mm, TN) for $245k and will
purchase a controlling interest for an additional $1.1mm within 9
months of approval of a change in control by bank regulators. First
Midwest Bancorp (FMBI) in Itasca, IL ("Please Don't Pronounce the "S")
has agreed to buy Great Lakes Financial Resources in Chicago. In
Pennsylvania ("Cook With Coal") The Gratz Bank ($206mm, PA) will acquire
The First National Bank of Minersville ($81mm). In Kentucky ("Five
Million People; Fifteen Last Names"), Ohio Valley Financial Group
($259mm) will acquire BankTrust Financial ($130mm). Texas' ("Se Hablo
Ingles") First State Bank ($722mm) will acquire North Texas Bank
($146mm). Over in Wisconsin ("Come Cut the Cheese") American Bank
($325mm) will acquire InvestorsBank ($204mm).

But
wait - there's more! Up in Idaho ("More Than Just Potatoes...Well Okay,
We're Not, But the Potatoes Sure Are Real Good") D. L. Evans Bank
($997mm) will acquire Idaho Banking Co. ($102mm) for a reported $10mm at
a bankruptcy court auction. The First ($988mm, MS) will acquire Bay
Bank ($78mm, AL). In Arkansas ("Literacy Ain't Everything") Cross County
Bank ($199mm) will acquire Forrest City Bank ($56mm). I know that the
commentary mentioned this earlier this week, but up in Indiana ("2
Billion Years Tidal Wave Free") MutualBank ($1.4B) will acquire Summit
Mortgage Inc. And in nearby Ohio ("At Least We're Not Michigan") The
Union Bank Co. ($555mm) will acquire The Ohio State Bank ($94mm) for an
undisclosed sum. Union will assume $3.0mm in trust preferred stock plus
unpaid interest, repay $550k in senior debt and make a cash payment of
50% of Ohio's tangible capital at closing.

Who
says that mortgage insurance is boring? Plenty of MI companies weighed
in (and did a little self-promoting) on the Federal Housing Finance
Agency ("FHFA")'s release for public input the proposed Private Mortgage Insurer Eligibility Requirements ("PMIERs" - as if we need yet another acronym in our lives).
The PMIERs represent the standards by which private mortgage insurers
are eligible to provide mortgage insurance on loans owned or guaranteed
by Fannie Mae and Freddie Mac. Private mortgage insurers looking to do
business with Fannie Mae and Freddie Mac would have to hold minimum
amounts of liquid assets under new standards proposed today by the
companies and their regulator. To back loans packaged into securities by
the U.S.-owned mortgage-finance giants, insurers would have to hold
liquid assets worth at least 5.6 percent of their risk exposure, and
possibly more depending on the quality of the loans they cover.

From Bermuda, where "tax" is a four letter word, Essent Group Ltd.
stated, "Assuming the PMIERs are enacted as proposed, Essent's mortgage
insurance subsidiary, Essent Guaranty, Inc., would be in compliance
with the new capital adequacy requirements in the PMIERs based on
financial information as of March 31, 2014. 'We commend FHFA, Fannie Mae
and Freddie Mac for all of their work in revising the PMIERs,' said
Mark Casale, Chairman and CEO. 'Updating the PMIERs is important to the
health of the housing finance system in general, and the mortgage
insurance industry in particular. We believe that the proposed
risk-based capital adequacy framework in the PMIERs is fundamentally
sound. The PMIERs will serve as an important set of national standards
that give industry counterparties added confidence in the claims paying
capacity of private mortgage insurance companies, including Essent."

Arch MI
chimed in. "We are proud to announce that, if the GSEs' draft financial
requirements went into effect today, Arch Mortgage Insurance Company
(Arch MI) would meet those requirements. For more information, please review ourrecent press release. Arch MI's financial strength today allows us to meet the PMIERs standards immediately - which means we can meet your needs and counterparty demands now.
You can be confident that loans insured by Arch MI are backed by
financial strength that amply satisfies the new rules on asset
requirements and offers you greater flexibility in solving your capital
issues."

Northern California's National MI
remarked, "'National MI believes that the proposed eligibility
requirements for private mortgage insurers will go a long way to help
restore confidence in an industry affected by the recent housing
crisis,' CEO Brad Shuster said. 'A strong and financially sustainable
private mortgage insurance industry is a key component of a healthy
residential mortgage market...National MI believes it will be
well-positioned to meet the new eligibility requirements when they
become effective and to continue serving the needs of mortgage
lenders.'"

I had no success trying to find an announcement on UG's website's news page.

USMI
jumped in. "Once finalized, the new PMIERs will complement the
significant progress the industry has made since the housing downturn.
The MI industry has recapitalized, attracted new entrants and finalized
new master policies that will go into effect October 1 of this year and
provide greater clarity and transparency on the mortgage insurance
process - from origination through servicing and claim settlement.
Mortgage insurers have played a very important role during the downtown,
covering approximately $44 billion in claims since the GSEs entered
conservatorship, resulting in a substantial savings to taxpayers. The
draft PMIERs are subject to a 60 day notice and comment period. USMI
member companies expect to provide comments to FHFA during the public
input period and to work closely with FHFA and the GSEs to implement the
PMIERs."

From Philadelphia, Radian
noted, "'Radian fully supports the need for strong counterparties to
Fannie Mae and Freddie Mac, and the need for well-defined standards
against which private mortgage insurers should be measured,' said Radian
Guaranty President Teresa Bryce Bazemore. 'We
believe appropriately structured PMIERs will better position our
industry to continue serving its critical role in the housing finance
market, including providing worthy borrowers with access to
homeownership.' The proposed PMIERs reflect limited initial input from
Radian. The
company will provide additional commentary to the FHFA on several areas
of the proposed PMIERs during the public comment period, which is
expected to end on Monday, September 8, 2014. Among
these areas, Radian will note that the proposed capital requirements
are more onerous than Radian's historical default experience suggests
would be needed to withstand a severe stress event."

Interestingly, Inside Mortgage Finance
reported recently that since under the new rules stacked capital would
not be allowed unless the subsidiary can pay a dividend, is publicly
traded, or if the parent company can guarantee the dividend, it could
raise concerns in the market about Radian's capital position. ("Capital
stacking" is putting the assets of one insurance company into another so
that the capital of the first company counts for the second.) KBW
reports that at the end of the first quarter Radian's mortgage insurance
business had $1.4 billion of statutory capital and $27.1 billion of net
risk in force for a risk-to-capital ratio of 19.2 to 1. Radian Asset
Assurance, the financial guaranty business, is the source of most of
Radian's capital. At the end of 1Q, Radian Asset Assurance had capital
of $1.2 billion that was counted towards capital for the mortgage
insurance business.

"Radian
Asset Assurance paid a $36 million ordinary dividend to Radian Guaranty
in 3Q13 and is expected to pay a $32 million ordinary dividend to
Radian Guaranty in 3Q14. Since that unit stopped writing insurance in
June 2008, it has paid cumulative dividends of $420 million to Radian
Guaranty. Given the 80% reduction in risk-in-force at Radian Asset
Assurance, the company has asked its regulator, the New York Department
of Financial Services (DFS), for permission to make a special dividend
later this year. We believe that investors had expected a haircut on
stacked capital, but the IMF article suggests that the haircut will
effectively be 100% and stacked capital will not be allowed unless it
can be paid out as a dividend. We continue to believe that the haircuts
are unlikely to be 100% and that there will be at least one year and
potentially longer to comply. Also, sources of incremental capital for
Radian mortgage insurance include 1) ordinary and special dividends from
Radian Asset Assurance; 2) almost $800 million in cash at the holding
company; 3) $500 million in statutory capital over the next 2-3 years
from reversal of the DTA; and 4) estimated earnings of around $450
million through the end of 2015. Finally, reinsurance should be readily
available to the company; however, this would result in a reduction in
earnings."

Coincidentally, Radian released its monthly operating statistics for June.
New default notices increased 1.0% from May and the ending delinquent
inventory declined 2.6%. Ending delinquent inventory was down 7.9% from
1Q. June new insurance written (NIW) came in at $3.53 billion, up 18.9%
M/M, with NIW for 2Q totaling $9.34 billion. 2Q NIW was slightly below
our estimate of $10.9 billion, but we think slower prepayments will
provide a partial offset. New default notices increased 1.0% M/M to
4,024 from 3,984, compared with a 15.6% M/M increase in May and a 4.5%
decrease in June 2013. For 2Q, new default notices totaled 11,454, down
5.4% Q/Q. This compares to an 11.9% decrease last quarter and a 1.3%
decrease in 2Q13. The NIW number that totaled $3.53 billion in May is up
18.9% from $2.97 billion in May. Total NIW for 2Q came in at $9.34
billion.

MGIC
is expanding its Go! program to include loans receiving "Ineligible"
responses due to the LTV or loan instrument that are accompanied by a
valid risk rating of DU® Approve or LP® Accept. This expansion is
subject to additional overlays: Primary residences only, Maximum
LTV/CLTV - 97%/97%, Property Type - 1-unit, Loan Purpose - Purchase,
rate/term refinance or construction-permanent, Maximum DTI - 45%, Loan
Types - Fixed-rate or ARMs with an initial fixed term of at least the
first 5 years (Qualify ARMs using MGIC's Underwriting Guide Section
3.06b).

Arch MI is offering a complimentary webinar
titled "Processing - Using the 1003 as a Roadmap." Two Sessions
Available: July 17, at 10am and 1pm Pacific. Learn how the loan
application, or 1003, provides a valuable roadmap to guide you to a
quality loan decision. Learn how this roadmap can help you gather and
verify the documentation required to successfully process a mortgage
loan.

We've
seen a little volatility in the market - but certainly not enough to
move rates and prices out of the range they've been in for several
months. The 10-yr closed Thursday back in the 2.50's (2.53%) after some
news overseas pushed yields lower. But agency MBS prices still hung on
to slight gains by the end of the day - better by about .125 - even if
Treasury rates went back to unchanged versus Wednesday. It's all about
supply and demand, and the Fed will be soaking up production for another
month or two, even with QE tapering off. There is no scheduled news for
today, and rates are virtually unchanged from Thursday's closing levels.

About the Author

Rob Chrisman began his career in mortgage banking â€“ primarily capital markets - 27 years ago in 1985 with First California Mortgage, assisting in Secondary Marketing until 1988, when he joined Tuttle & Co., a leading mortgage pipeline risk management...
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